he RBI plans to introduce polymer ₹10 and ₹20 notes from the beginning of the next financial year, with the new notes circulating alongside existing paper currency.
The central bank selected ₹10 and ₹20 notes because they account for 25% of banknote volume but only 1.4% of the total value of currency, reducing financial risk during the trial.
The pilot will evaluate the notes' durability, printing efficiency, public acceptance and resistance to counterfeiting before the RBI considers expanding polymer currency to higher denominations such as ₹100 and ₹500.
RBI Sets FY28 As Timeline for Polymer Currency Pilot, Starts With ₹10 and ₹20 Notes
The central bank will begin with ₹10 and ₹20 denominations to test the durability, security and public acceptance of polymer banknotes before considering a wider rollout
Digital illustration conceptualised by Ragini Singh
Summary
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The Reserve Bank of India (RBI) plans to launch a pilot programme for polymer banknotes from the beginning of the next financial year, Governor Sanjay Malhotra said on Wednesday after the central bank's monetary policy announcement.
"We are targeting that they [polymer notes] are in circulation if everything, you know, goes as per plan in the beginning of the next financial year," Malhotra said.
The pilot will initially cover ₹10 and ₹20 denominations, with the new polymer notes circulating alongside existing paper currency. The RBI has clarified that there are no plans to replace paper notes entirely at this stage.
Why ₹10 and ₹20 Notes?
The RBI's choice of lower denominations is driven by both operational and financial considerations.
Although ₹10 and ₹20 notes account for nearly 25% of the total volume of banknotes in circulation, they represent only 1.4% of the total value of currency. This allows the central bank to test the new material on a large scale while limiting financial risk.
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Another advantage is that these denominations are primarily distributed through bank branches rather than ATMs.
This enables the RBI to conduct the pilot without immediately modifying ATM infrastructure, as existing machines are not designed to recognise polymer notes.
Introducing higher-value denominations would require extensive software upgrades and recalibration across the banking network.
More Durable, Harder to Counterfeit
Polymer banknotes are more resistant to dirt, moisture and tearing than conventional paper notes, giving them a significantly longer lifespan.
They are also considered more secure against counterfeiting because of the advanced security features that can be embedded in the material.
The pilot will assess several aspects, including durability, printing efficiency, public acceptance and counterfeit resistance before any wider rollout is considered.
This is not the RBI's first attempt to introduce polymer currency. A similar proposal to pilot plastic banknotes in 2009 was eventually shelved because of technical challenges.
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If the trial proves successful, the RBI could gradually expand polymer currency to higher denominations, including ₹100 and ₹500 notes, paving the way for a broader modernisation of India's currency management system.